Wall Street reacted with unease to Federal Reserve Chair Jerome Powell‘s remarks following a landmark decision to cut the federal funds rate by 50 basis points, bringing it down to a target range of 4.75% to 5%.
The Federal Reserve’s highly anticipated dot plot, which outlines each policymaker’s rate path preference, indicated that policymakers anticipate further easing ahead. The dot plot signaled that the Fed is likely to cut rates by a quarter percentage point at each of the next two decisions. Looking further ahead, it suggests an additional rate reduction of at least another percentage point in 2025.
Despite the initial market euphoria following the 50-basis-point rate cut, Powell’s cautious remarks on the future rate path have injected uncertainty into the markets.
See Also: Interest Rates In Free-Fall – What It Means For Mortgages, Credit Cards And Your Wallet As The Federal Reserve Springs Into Action For First Time In 4 Years
Market Response To Rate Cut, Powell’s Remarks
Initially, the S&P 500, tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY), surged to record highs. Gold prices, represented by the SPDR Gold Trust (NYSE:GLD), also hit all-time highs as the U.S. dollar weakened.
Interest-rate sensitive stocks were the largest gainers between ...
